Trading Psychology

“You must understand that there is more than one path to the mountaintop.” – Miyamoto Musashi, “The Book of Five Rings: The Classic Guide” Many experienced entrepreneurs say that the biggest challenge an aspiring trader faces is overcoming one’s own …
“You must understand that there is more than one path to the mountaintop.” – Miyamoto Musashi, “The Book of Five Rings: The Classic Guide”
Many experienced entrepreneurs say that the biggest challenge an aspiring trader faces is overcoming one’s own mind. Why? Because losing money is part of the business, and people hate losing money.
For novice investors who lose money frequently, losing money is especially difficult. It’s hard to believe in yourself when you don’t have a track record and can’t put failure into perspective. But doing well is like being a good baseball player. If you hit 4 out of 10 homers, you’re considered a superstar. You win. You just have to understand and accept how it is.
Here is what successful money manager Tom Basso has to say about the importance of thinking about trading:
“I started out worrying about the methods I would use to trade, then I learned about risk management and volatility management, and then I learned about business considerations. By far the most important thing, followed by risk management, and most importantly, the question of where to buy and sell.”
This section is designed to help you:
- Understand the personal psychological challenges you must overcome to be successful
- Learn why some traders make bad decisions and how to overcome self-destruction
- Emphasize the importance of creating a business plan that suits you and your personality
You might be intersted in
Trading: from competency to skill
Novice traders mistakes
Escalation of Commitment and the Sunk Cost Fallacy

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